hands

and whether they have an
exit strategy. It fits comfortably
into our business planning process.
“The fact they can expect a
decision in a matter of days, unlike at the
bank where their bank manager may take
weeks to make a decision, allows them
to be flexible and be responsive to the
economic environment.”
A model yet to meet maturity
Of course, investors want their nest
eggs to grow. And while the sector is
expanding exponentially, the end game
is less clear because the market is yet
to mature.
“But small investors are more active,
and more concerned about control or
influence over how their money is used.
For businesses trying to raise funds,
this is perfect,” explains alternative
finance pioneer and Director of the UK
Crowdfunding Association, Bruce Davis.
He believes SMEs are already being
better served by a more competitive
lending market.
“Banks are facing increasing
complexity thanks to a raft of new
regulations, such as Basel III, but
businesses now have a viable and
convenient alternative. On the high street,
“SME finance is like the dating
market. If you only look at
traditional banking sources for
finance, it’s akin to still expecting
to meet your partner at a dinner
party. Today you search online
using one of many platforms.”
Neil Stammers, Haines Watts
banking is about doing a lot of efficient
lending to core customers,” he explains.
“They have responded to factoring
and invoice finance areas of the market,
but many businesses are going direct
to a platform because it is a transparent
process. They can also shop around
without their credit rating being affected.”
Sector with an independent streak
The implementation of a requirement for
banks to refer any customer they turn
down on to a peer-to-peer (P2P) platform
is not a game-changer as it is already first
choice for many, according to Bruce.
“Consumers now have more
negotiating power,” he says. “In this post-
Brexit and Basel III economy, we will see
the P2P sector and challenger banks such
as Atom and Metro, which don’t have the
volume of customers to stick to traditional
lending strategies, offering genuine
alternatives.”
FinTech will also continue to filter
through to the SME market, Bruce adds.
“Apps being tested in the retail space at
the moment will inevitably move into P2P
lending. We are a service economy, and
the transparency offered by alternative
finance platforms means SME owners
could have sight of their finances, and
the ability to take a loan to cover any
eventualities, 24/7.
“They can get an instant decision
on a loan to cover a short-term gap in
cashflow or respond to quickly changing
market forces by hiring a new person, for
instance. This can only be a good thing,”
Bruce concludes.
study
Worth Capital
As with most start-ups, it all
starts with an idea.
Marketers and Haines Watts clients,
Paul Soanes and Paul Ephremsen,
know that entrepreneurial teams
sometimes need a little help, be it
funding or advice, to transform their
idea into a living, breathing entity.
In 2014, they worked with Seedrs
to raise equity funding to allow them
to support Worth Capital, a peer-topeer
platform which runs funding
competitions.
Early in 2014, it launched the
Worth Foundation Fund, aimed at
retailers and in conjunction with the
Metro newspaper. Later in the year
it then worked with Facebook to set
up the Big App Fund in 27 countries
across Europe.
Worth Capital also launched its
Start-Up Series in October 2016,
a monthly competition offering
prizes of up to £150,000 to the best
and brightest new entrepreneurial
ventures.
And Haines Watts has been able
to support Worth Capital in its own
development from start-up to mature
funding platform.
“We provide general business
guidance, but we also act as a
sounding board, particularly at the
monthly board meetings”, says
Haines Watts’ Neil Stammers.
Paul Soanes
Paul Ephremsen
Backing your business 5